Is China More Free Than America?
Seven years ago today this question would have been ridiculous.
Time has a way of changing things, though, and the day that the answer to this question is ‘yes’ may be closer than anyone would have thought possible.
What kind of freedom?
Freedom is really a whole, as the classical liberals understood, but most people divide it in two parts:
- Political
- Economic
Politically, China is still far from as free as the US. But the wide gap draws narrower every day. Especially thanks to reactions to the terrorist attacks seven years ago.
Arbitrary political power in the hands of the executive grows daily in the US - in China, it has stayed the same.
Economically is an entirely different story.
Total taxation as a percentage of GDP is much lower in China than the US (18% China vs 35% America). While corruption and the remaining state owned enterprises in China still warp China’s economy out of shape, the toll they take on economic freedom drops by the day.
China has a seemingly enormous grey market economy that operates outside of the reach of government interference and control.
And China hasn’t sold a huge portion of its national debt and mortgage backed securities to the highest sovereign bidders and hasn’t bailed out the holders of the second type of securities like the US did with the Fannie & Freddie bailout.
Apparently someone was listening when professor Yu from the Institute of World Economics & Politics at the Chinese Academy of Social Sciences in Beijing said this:
If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic, if it is not the end of the world, it is the end of the current international financial system.
So China as a country is not beholden to the interests of other nations who hold its debt, individuals pay lower current taxes and are not on the hook for massive amounts of future taxes or inflation, and has applied financial leverage on the ‘most powerful country in the world’.
The US, on the other hand, has moved ever further toward fascist intervention in the markets - the bailout of Fannie & Freddie being only the most recent and extreme such instance.
The US as a country and hundreds of millions of consumers have piled themselves under an enormous amount of debt.
And as blowups continue to happen in the financial system (and they will, despite the massive intervention on behalf of banks and foreign investors), the Federal Reserve will choose to turn the printing press on full throttle.
Seem likely? And which is now more free economically - America or China?
